March 2015

On March 30, Australia’s treasurer Joe Hockey announced a tax reform discussion paper titled Re:think, in prelude to a white paper expected late this year. Advisers say that reform of corporate and personal income tax hinges on changes to the rate and base of GST – an option that remains politically unpopular.

In an effort to place itself at the centre of venture capital and private equity investment in Asia, the Hong Kong government introduced a Bill in its Legislative Council on March 25 to extend an exemption from the territory’s 16.5% profits tax to include offshore private equity funds, which is already extended to other types of offshore funds.

Making good on his promise that the government would crack down on so-called black money, India’s finance minister Arun Jaitley has introduced a Bill in the lower house of parliament (Lok Sabha) which would penalise Indian tax evaders with a whopping 90% penalty and possible jail time if convicted of non-disclosure of undeclared assets held outside the country.

Achim Pross, head of the International Cooperation and Tax Administration division at the OECD, and architect of the new automatic exchange of information standard and the multilateral competent authority agreement (MCAA), which 52 jurisdictions have signed so far, discusses the progress made in 2014 and looks at opportunities and challenges ahead.

Matthew Gilleard talks with Pascale Colin, group tax manager at EFG Bank, about the role of the tax director, her journey in getting there, and operating successfully in a rapidly-evolving Swiss, European and global tax environment

If political instability, leadership changes, and tightened tax laws weren't strenuous enough, plummeting oil prices in the latter half of 2014 left many governments and corporations exasperated, questioning how low prices could conceivably go. Meredith McBride analyses how authorities around the world have responded with sectoral tax changes.

The potential Chinese tax implications of the provision of cross-border services into China are as numerous as they are confusing. Scott Heidecke and Flora Luo of Nexia International member firm Nexia TS (Shanghai) discuss some of the practical considerations.

The new EU legislation changing the place of supply of business-to-consumer (B2C) electronic services, telecommunications and broadcasting to the country of the consumer has been the VAT story of the year. Joe Stanley-Smith speaks to Dermot Donegan, head of VAT policy at the Irish tax authority (Revenue), about how the plans were finalised during the Irish presidency of the EU Council, his thoughts around their implementation and the possibility of expanding the mini one-stop shop (MOSS) to cover goods and other services.

John Cassidy, tax investigations partner at Crowe Clark Whitehill in London, looks at trends in information sharing, and whether there will be any limits to the use of UK authority powers when it comes to data-sharing on offshore assets.

Taxpayers may have plenty to fear if next week’s Tenth Circuit case concerning the so-called Amazon tax goes in favour of Colorado, as it could lead other states to implement similar rules to cash in on the verdict, massively increasing US compliance burdens for online traders, as well as hitting their profits.

The recent release of Ireland’s major strategy paper, ‘IFS2020 – A strategy for Ireland’s financial services sector 2015-2020’ addresses Ireland’s five year strategy in further developing the country as a global leader in the financial services sector.

Dave Hartnett, formerly the most senior tax official at the UK revenue authority, HMRC, this week defended his decision to take a job at under-fire bank HSBC, and expressed his “surprise” that only one prosecution has arisen from the bank’s leaked documents.

Securitisation has been commonly used for a variety of financial transactions ranging from the securitising of loan books to real asset holding such as aircraft. Lord Hill, EU commissioner, has announced an intention to reconsider the EU’s approach to securitisation and identify elements where the regulatory burden for investors can be lightened, but Ireland already has provisions which make it a popular location for securitisation vehicles.

It is widely recognised that Ireland is one of the major worldwide hubs for aircraft leasing and related financing structures. What is less well known is that Ireland’s tax system has been tailored to suit the needs of companies that require a base for shipping operations.

The European Commission is promoting its Tax Transparency Package, published yesterday (March 18), as a tool for “healthier” tax competition as well as for helping member states identify abusive tax practices.

The uncertainty in the municipal service tax legislation regarding the export of services from Brazil is causing debate about cross-border transactions. Ricardo M Debatin da Silveira and Gabriel Caldiron Rezende of Machado Associados argue that the municipal tax authorities’ interpretation of the law is wrong.

George Osborne, UK chancellor of the exchequer, delivered his final Budget speech before the general election today, with welcome tax cuts for the UK’s oil and gas industry and a reduction in the number of companies that have to submit information to HM Revenue & Customs about their liability, or not, for the controversial diverted profits tax (DPT).

Inward investors have expressed concern about proposals that China will levy a 10% capital gains tax on profits earned by foreign investors, with no opportunity to deduct for losses. While some tax advisers welcomed the clarity, some funds may struggle to pay the higher-than-expected tax bills on gains earned over five years between 2009 and 2014.

In its recent judgment in Investment Trust Companies (in liquidation) v Commissioners for HMRC [2015] EWCA Civ 82, the Court of Appeal in London found that investment trust companies (ITCs) could recover from the UK revenue authority, HMRC, the amount of the VAT they paid to their managers, who then paid it to HMRC, in each period claimed. However, they could not recover from HMRC the amount of any input tax set against their managers’ VAT liability. Instead, ITCs now must bring separate claims against their managers for these amounts.

As Indian prime minister Narendra Modi visited Mauritius during its national day celebrations March 12, the two countries pledged to move forward with negotiations to update their double taxation treaty.

Every enterprise that is, or may be, engaged in a tax controversy should address the issue of information governance now rather than waiting for the issue to arise in the context of a tax dispute. Information governance has become an essential element of corporate risk management.

The African Tax Administration Forum (ATAF) and the African Tax Research Network (ATRN) are holding their first ATRN congress in Cape Town, South Africa (not Victoria Falls in Zimbabwe) in September and are now calling for papers for the event.

During national legislative meetings on Sunday March 8, a draft revision of China’s Legislation Law was submitted, mandating that all taxes be imposed through legislation, which taxpayers say would provide greater consistency and transparency. The existing system allows China’s cabinet, the State Council, to collect taxes based on ‘regulations’ and ‘provisional rules’.

Luxembourg's compliance with the Foreign Account Tax Compliance Act (FATCA) moved a step closer on March 6 after the government adopted draft legislation to ratify its bilateral intergovernmental agreement with the US.

Korea is targeting global online retailers in its expanded VAT legislation, which will tax the non-resident distributors of digital content to Korea customers. From July 1 2015 electronic service providers will be charged 10% VAT on all sales made to Korean consumers, regardless of whether they have a Korean presence.

The European Court of Justice (ECJ) has ruled in favour of the taxpayer in the de Ruyter case, finding the French social charges on source property income for foreign tax residents to be against EU principles.

A group made up of a university, a professional services firm, a development bank and research and educational organisations is coming together to offer training for Eurasian and African tax officials.

The first full Budget from Narendra Modi's Indian government was keenly awaited by corporates, partly because of the pro-business sentiment presented by Modi and his finance minister, Arun Jaitley, since taking office. The two did not disappoint, bringing clarity to taxpayers and foreign investors on a number of fronts. ITR's special report takes you through the hopes and fears of taxpayers in the build-up to Jaitley's Budget speech, and analyses the corporate tax measures announced on the day. We also bring you our exclusive interview with Finance Minister Jaitley from December 2014.

Nine countries are now part of the initiative to jointly publish annual tax revenue statistics for Africa, a project aimed at improving the transparency, reliability and comparability of revenue statistics between African countries, but also with other regions of the world.